Xbox One: Thoughts

The new Microsoft console, Xbox One, has just been revealed, with more details to come at E3. These are my initial thoughts. I’ve already written up and retweeted a bunch of immediate reactions on Twitter:

So, what is going on with this thing? To me the Xbox One looks like the consolidated last gasps of several industries fighting progress. Sure, there’s lots of new technology going into that Kinect, and there are lots of computers in those clouds. But that’s not the innovation that really matters to people. What’s in the box doesn’t matter anymore as long as it’s good enough. What matters to people is what they get out of it.

The main technology that is at issue here for all the big companies jumping in bed to conceive Xbox Juan is the internet. What is the internet? Basically: rapid worldwide communication. It’s not much more complicated than that, but the implications are significant. The natural human tendency best facilitated by the internet is sharing, and this is what so many entrenched industries are now waging war against. To control the internet, to control how and what people are allowed to share, entertainment giants collaborate on increasingly draconian copyright laws and DRM schemes. With the ability of the internet to eliminate many of the middlemen between creators and consumers, content distribution is now an extremely lucrative market inefficiency. Rent-seeking.

The other subtle threat the internet represents to these companies is information overload: everyone connected now has access to more content than a person could ever consume in a lifetime. TV service providers are terrified of the idea that through the internet consumers may actually find that they can actually get along just fine without a premium TV subscription. Most are also ISPs, so they can do things like require you to subscribe to their TV services if you want their best net connection, but that may not be possible forever. Control of content is such a big deal that any company that does a better job of giving customers what they want the way they want it treads dangerous ground, as Netflix found. Netflix ended up starting to create its own high-quality content in order to reduce the risk created by not having any legal control over the essential element of its business, and Amazon and now Microsoft have followed suit.

Big game companies and Hollywood film studios are doggedly pursuing a strategy of betting more and more on individual titles. They are simultaneously attempting to outlaw sharing of their content while erecting enough barriers to legitimate access that they have veto power over each new technology that comes along. The first-sale doctrine is under assault, since as rent-seekers, their ideal world includes only one way to access content: rentals.

And Microsoft’s power has been slipping for quite some time. Starting when OS X provided a viable alternative to Windows and continuing with the market’s shift of emphasis toward net and mobile apps, where other companies are king, Microsoft has been fighting a losing battle for relevance. Its strength has always been in marketing, but with the increased choice and communication afforded by the internet, consumers can now more easily see through bogus marketing claims. The Xboxes have always had a hose pumping money into them from the mothership because games were never the real mission. That was to take over the living room, to give Windows and Microsoft a new body in which to weather the post-PC future. And now it’s coming close to the point where Microsoft will need to be able to reverse the direction of the money hose in order to survive. Microsoft is a big ship; your subscription fee won’t be enough. There will be a price tag on everything. (And an advertisement—why charge only one person when you can charge two?)

It will be a TV remote, video phone, web browser, and game console. But best of all, the only way to play (or watch, or listen) will be through rentals.

Consumers aren’t invited to this party; this one isn’t for you. Looks like Leigh Alexander beat me to the punch in pointing that out, and she highlights a flaw with this strategy: Microsoft’s bet on the TV as the successor to the PC hasn’t panned out. Now they are doubling down. I don’t think they will be happy with the result.

Update 5/24/2013: Nicholas Lovell published a nice piece today on Gamasutra about how the Xbox One is the continuation of Microsoft’s flawed living room dominance strategy.